Government 'passing the buck' for cuts to councils, says MP

MINISTERS are attempting to pass the buck for cuts to local services to councils ahead of a council tax "bombshell" in 2020, a Labour MP has claimed.

Shadow local government minister Jim McMahon, a former leader of Oldham Council, said the Local Government Finance Bill currently before Parliament aims to make town halls directly accountable for a projected £5.8bn funding shortfall.

The legislation would abolish the Local Government Finance Settlement, which has to be approved by parliament, as part of the shift to councils funding services through 100 per cent of business rates instead of the central Revenue Support Grant.

It will also grant the secretary of state the power to allocate additional funding based on "principals of allocations" that would be open to consultation but not parliamentary approval.

The Government said the changes will ensure that "accountability for funding local services with local resources sits with local councils".

This will encourage greater focus on what local authorities can do to increase business rates income, set appropriate council tax levels and improve efficiency," DCLG said.

But in an interview with the Guardian, McMahon said the bill shows the Government is "refusing to take ownership" of the funding gap facing local services and social care in particular.

The Local Government Association has forecast a £5.8bn black hole in council finances by 2020, which includes a £2.6bn shortfall for social care.

Elsewhere, the Association of Directors of Adult Social Services said councils are already facing a £441m overspend on adult social care this year, up from £168m in 2015-16, and 97 per cent believe the social care precept is making little or no difference. It has called for £1bn in emergency funding to stabilise services. 

McMahon warned that funding pressures will leave residents facing a "council tax bombshell" by 2020, despite the fact that the amount of local authority funding from council tax will have increased by 25 per cent by the end of the decade, the equivalent of town halls increasing the charge by the maximum allowed without triggering a referendum plus the maximum social care precept.

"[Ministers] know there is no new money and want as little scrutiny of that fact as possible, and they also know that even a 25 per cent increase in the amount of authority funding that comes from council tax won't be able to pay for that," he said.

"I suspect we'll see some really whopping council tax increases coming by the end of this parliament.

"You're asking people to pay more council tax than they've ever done before, with absolutely no consideration of their ability to pay, at a time when the universal services they think they're paying council tax for are being snatched away."

McMahon's warning comes after Surrey County Council's cabinet approved a 15 per cent increase in council tax, saying funding cuts and rising demand for social care in particular have left it facing a huge budget gap. The proposed increase will go to a public referendum on 4 May. 

Local government secretary Sajid Javid has said almost £200bn will be available to councils over this parliament, including £7.6bn in dedicated social care funding.